“In terms of economic activity, if they continue producing
here, there is no major reason not to sell,” Fischer said today
in an interview at his Jerusalem office. “Profits would be
moved abroad instead of kept in the Israeli economy, but the
main thing we would be interested in is loss of jobs and that
wouldn’t necessarily happen.”

Prime Minister Benjamin Netanyahu met on Oct. 31 with
Potash Corp. Chief Executive Officer Bill Doyle about a possible
sale and a few days later, Israel asked the company to clarify
the proposed acquisition. The government can block takeover bids
of the country’s second-largest company by market value by using
its so-called golden share.

Saskatoon, Saskatchewan-based Potash Corp. has a 14 percent
stake in Tel Aviv-based Israel Chemicals, which harvests
minerals from the Dead Sea and is controlled by Israel Corp. (ILCO) The
remaining 86 percent has a market value of about 50.2 billion
shekels ($12.8 billion), based on yesterday’s closing share
price.

Shares of Israel Chemicals, which opened down 1.2 percent,
added 0.7 percent to 46.16 shekels at 3:59 p.m. in Tel Aviv.

‘Carries Weight’

“As governor of the Bank of Israel, Fischer’s voice
carries weight,” said Richard Gussow, a senior analyst at Tel
Aviv-based DS Securities & Investments Ltd. “He is talking from
an economic point of view and there is some logic to the deal.”

Israel’s Finance Ministry said earlier this month that the
government “won’t allow any deal that endangers or impairs the
economic and environmental interests of the State of Israel and
its citizens.”

The ministry is concerned about loss of revenue from the
proposed merger should Potash Corp. decide to divert profits out
of Israel due to high taxes and royalties, TheMarker, a Tel
Aviv-based newspaper, reported on Nov. 7, without citing anyone.
Finance Minister Yuval Steinitz said this month that Israel’s
natural resources belong to its citizens.

Gussow said that even with Fischer’s remarks, “the
objection is going to come because the Dead Sea is one of the
country’s few natural resources and it also sits on the border
with Jordan, which is seeing some instability.”

Approval Awaited

Clal Finance Batucha Brokerage Ltd. said in a trader’s note
that while Fischer’s comments are a positive for a potential
deal, “real moves will wait for committees, regulatory
approval, pricing and then shareholder approval, in that
order.”

Officials are expected to meet Potash Corp. representatives
later this month, a Finance Ministry official said last week,
speaking anonymously because of the matter’s sensitivity. The
company last year agreed to pay increased royalties on potash
production and finance most of the costs to clean up salt
residue, a byproduct of potash production at the Dead Sea.

“What we don’t want is to sort of move all economic
activity abroad. We want economic activity to be kept here,”
Fischer said. “I don’t think there will be an issue. The
resources they are after is the potash itself. They have to get
it out of the Dead Sea.”

Potash Corp. dropped 2.7 percent yesterday to close at
C$37.98 in Toronto.